These minutes are in
compliance with Senate and House Rules. Only text enclosed in quotation marks reports a speaker’s exact
words. For complete contents,
please refer to the tapes.

TAPE/#

Speaker

Comments

TAPE 3, A

003

Chair Metsger

Calls the meeting to order at 1:11 PM. Makes opening comments on the committee
staff working for the committee.
Introduces assistant James Goulding and administrator Theresa Van
Winkle. Introduces Senators Laurie
Monnes Anderson, Ryan Deckert, and Bruce Starr. Comments on the positive results of his partnership with
Vice-Chair Starr during the interim on the Joint Transportation and Economic
Development Committee. Opens
organizational meeting to adopt committee rules (EXHIBIT A).

ADOPTION
OF COMMITTEE RULES - ORGANIZATIONAL MEETING

015

Vice-Chair
Starr

MOTION: Moves to ADOPT the proposed Committee
Rules.

VOTE:
4-0-1

EXCUSED: 1 - Atkinson

020

Chair Metsger

Hearing no objection, declares the
motion ADOPTED.

025

Chair Metsger

Outlines additional unofficial rules, including 48
hour notice for posting. Notes intent
to post hearings of bills 96 hours ahead of time when possible. States intent not to pass any bill out of
committee without bipartisan support.
Talks about transforming existing bills into new bills and making it
known in advance to avoid surprises.

060

Chair Metsger

Opens informational hearing on the sale of Portland
General Electric.

PORTLAND
GENERAL ELECTRIC SALE - INFORMATIONAL HEARING

065

Chair Metsger

Makes introductory comments on the Portland General
Electric (PGE) purchase. Points out
they are not commenting on merits of the case, but making sure the Public
Utility Commission (PUC) has the tools needed to protect public
interest.

090

Sen. Walker

Presents a draft of LC 819 (EXHIBIT B) to the committee members. Inquires about forthcoming hearing schedule and scope of
questions that can be asked.

095

Chair Metsger

Talks about testimony anticipated over the next two
meetings.

100

Sen. Walker

Wonders about the types of questions she can ask.

105

Chair Metsger

Clarifies the purpose and scope of the testimony.

110

Sen. Walker

Notes she may occasionally step out of the scope of
the hearing.

115

Lee Beyer

Oregon Public Utility Commission, Chair. Introduces Paul Graham. Presents written outline of his testimony
to the committee (EXHIBIT C). Makes opening comments on the nature of
the PUC and PGE. Goes over ground
rules of what he may and may not legally answer. Begins presentation of testimony, touching on delicate issues.

Begins overview of the PUC and their history, creation,
and function. Feels the agency’s role is to regulate
practices making sure utilities function, are of good quality, and are
reasonable and affordable.

200

Beyer

Presents testimony on the general practices and
functions of the PUC. Presents the
standards by which the PUC gauges the activities of utility providers. Discusses recommendations and decision
making processes. States that PUC
follows the rules of judicial procedure, similar to what courts do. Interested parties can gain access to trade secrets and other
documents and challenge them if warranted.

300

Beyer

Outlines history of mergers and acquisitions. Discusses PUC credit rating and its high
standards. Feels their job is to make
sure customers get good utility quality at a fair and reasonable rate. References the Enron scenario. Discusses Enron’s attempt to sell its
assets. Presents the current tools
available to the PUC and the control that it has.

395

Sen. Walker

Asks for clarification on his written testimony.

400

Beyer

Clarifies the item that he is referencing. Continues discussion of his
testimony.

420

Sen. Walker

Inquires if the action meets requirements for public
interest written in statute. Asks how
they can make a decision having not before adopted a legal standard for the
PUC.

TAPE 4, A

010

Paul Graham

Oregon Department of Justice. Points out that at the time it was written
they had never had a case of this type.
States that in other scenarios they had stipulations based on findings
in other cases.

025

Sen. Walker

Wonders if this is a precedent setting standard in
defining public benefit.

030

Graham

Affirms that it is and they have to create a
standard to define this issue.

035

Sen. Walker

Brings up the possible role of the legislature in
defining the standard.

040

Graham

States it is possible.

045

Beyer

Points out they function under the laws defined by
the legislature. Moves to discussion
on the current proposals. Discusses
formal cross examinations in their decision making process. Talks about what is involved in creating a
procedure. States there are 47 formal
intervenors in the case such as the City of Portland and others. Outlines the meetings held in the greater
Portland and Salem areas. Points out
the volume of responses received on the topic.

115

Beyer

States their decision can be appealed. Concludes his comments on the
process. Voices that the
commissioners are taking this issue very seriously. Points out that any action taken will generate responses that
are half positive and half negative.

Moves on to discuss the Enron bankruptcy filed in
New York and how it relates to the PUC.
States PGE will be owned by someone else once the liquidation of Enron
is complete. Details the possible
outcomes regarding the sale of the utility, including the PUC role in a
parcel purchase. Details the tax
structure and different strategies.

225

Chair Metsger

Thanks Mr. Beyer for his testimony. Wonders about the statute regarding
serving the public’s best interest. Discusses the complexity of defining what the “public interest”
really means. Offers the question of
whether the legislature should give them assistance in the decision making
ability to serve the statute.

245

Beyer

Replies that would make his job easier having more
power, but it would be difficult to do.
Talks about the broader areas of public interest, feels they don’t
have the mandate for that decision making power.

270

Chair Metsger

Discusses Sen. Walker’s LC 819 draft. Wonders about
the rate setting process and their involvement with a holding company. Asks about the potential of a ratepayer
paying for their own credits.

300

Beyer

States he cannot respond on this matter.

305

Graham

Points out the tax issue does not involve just the
PGE, but any utility. Feels that a
generic approach is best so all companies can be represented. Talks about the commission’s role. Feels it is a tax issue and not a
regulatory issue.

340

Chair Metsger

Offers additional questions on intervenor funding to
oppose proposals, asks for his evaluation on this issue.

365

Beyer

Replies that only 3 or 4 parties have applied. Feels it has helped them receive the
assistance they need.

385

Chair Metsger

Asks what standard a court would use to evaluate the
actions of the PUC.

390

Graham

Responds that it is an appellate standard through a
circuit court. Details the criteria
of a court challenge.

TAPE 3, B

005

Chair Metsger

Clarifies Mr. Graham’s answer.

007

Graham

Concurs with the clarification.

010

Chair Metsger

Asks if there are any concerns of having such a
large customer base served by a publicly owned utility without legislative
direction.

020

Beyer

Declines to answer the question.

025

Sen. Walker

Asks for permission to ask several questions. Wonders about court evaluation regarding
public benefit.

030

Graham

Replies that if it is felt the commission has
misapplied a law, they can be challenged.

032

Sen. Walker

Wonders about the process of sealing trade secret records.

035

Beyer

Replies with his understanding that sealing records
is a fairly standard procedure.
States incidents where the decision may be challenged.

055

Sen. Walker

Feels it is not in the public’s best interest to
seal documents. Talks about sealed
documents outlining the problems with Enron’s practices.

060

Graham

Responds that they receive a lot of requests for documents;
some secret. Outlines the protective
agreements between businesses and the PUC.
Points out many have had access to those documents to protect their
customers.

080

Sen. Walker

States she had asked to see the documents in question.
Points out the Attorney General’s
investigation of Diana Goldschmidt’s role on the Oregon Investment
Council. Wonders if they have held
the record open for the report now that it is complete.

090

Graham

Replies that they will take official notice of the
information in the report when they receive it.

100

Sen. Walker

Details LC 819, and asks him to bring up some points
discussed between them prior to the meeting.

115

Beyer

Replies Enron has ultimate rights to PGE and is
required to sell it.

120

Sen. Deckert

Wonders what has been learned since the 1997 sale of
Enron.

125

Beyer

Responds about movement of funds and having access
to records.

145

Sen. Deckert

Voices the value of Mr. Beyer’s presentation. Wonders if they have approved each
acquisition request. Asks if the
legislature could do a better job by being specific in its decision making.

160

Beyer

Replies that most have been concluded via
settlement. Points out the importance
of creating clear intent in their laws.

175

Vice-Chair Starr

Wonders about the ramifications for leaking sealed
documents to the public, as occurred last year.

185

Graham

States there has been a PUC violation of the law,
and that the ones who released the leaked documents can be fined, sanctioned,
or barred.

190

Vice-Chair Starr

Asks if there have been previous violations.

195

Graham

Replies this is the first time it has happened at
the PUC.

200

Chair Metsger

Thanks Mr. Beyer and Mr. Graham for their testimony. Invites Robert Bingham, Mitchell Taylor
and Michael Morgan of Enron to testify.

235

Robert Bingham

Interim Chief Financial Officer, Enron. Presents written testimony to the
committee (EXHIBIT D). Outlines the current state of Enron and
that when the assets have been liquidated the company will cease to
exist. Reads the written testimony
relating to the current liquidation of Enron’s holdings.

395

Chair Metsger

Wonders about the consequences of failing to sell
PGE. Offers that there is greater
value in the entire entity, than dividing into its separate parts.

410

Mitchell Taylor

Managing Director, Enron. Responds that PGE would essentially revert back to a publicly
owned utility.

415

Chair Metsger

Asks Mr. Taylor to identify himself for the record.

420

Taylor

Identifies himself.

425

Sen. Walker

Inquires if there is a set deadline for completion
of the liquidation process.

TAPE 4, B

005

Bingham

Replies there is no official deadline. Offers that they will be finished when
they have addressed all remaining claims.

010

Sen. Walker

Mentions how Eugene’s court system offers its
documents on-line. Wonders if all the
statements are available on-line.

015

Bingham

Replies that E-Law or Enron websites have all
related documents available.

025

Sen. Walker

Inquires about the sale issue and the right to
sale. Wonders if it is possible for a
sale of the utility to the State of Oregon or City of Portland.

030

Bingham

Replies they have a new board of directors and they
will consider the best viable offers made.

045

Sen. Walker

Ponders what PGE is doing to reduce its costs.

065

Bingham

States that PGE should be addressed directly.

070

Sen. Walker

Clarifies that Enron cannot address PGE’s actions.

075

Sen. Monnes Anderson

Inquires on the options if the sale of PGE doesn’t
happen. Wonders what the process
would be if they were to become a stand alone utility again.

080

Bingham

Relates the options, finding another buyer, and the option
of liquidating their shares to creditors.
States that it would be easier to sell the stock to creditors.

095

Sen. Monnes Anderson

Asks for clarification.

100

Bingham

States again the options for the sale of the PGE, or
sale of its stock making it widely held.

110

Sen. Monnes Anderson

Wonder if a group of PGE stockholders could purchase
the shares.

115

Mike Morgan

States that once the stock is traded anyone can
purchase it.

120

Sen. Deckert

References the ‘Project Tahoe’ documents that were
leaked. Asks if they are aware of
them.

128

Bingham

Concurs they are aware of the documents.

130

Sen. Deckert

Discusses the documents and the comments made that
PGE is undervalued and could be turned into a profitable business and sold. Wonders what their feelings are on the
real value of PGE.

140

Taylor

Replies that from their perspective the document
contained preliminary findings and that many within PGE do not agree with the
findings.

155

Bingham

Offers additional information on the possible sale.

165

Sen. Deckert

Asks if Enron authorized any study of PGE’s value
before putting it up for sale.

167

Taylor

Replies they have, but not through third parties.

170

Bingham

Offers that there were some outside evaluations of
PGE’s value.

180

Sen. Deckert

Inquires if there were any outside independent
audits performed.

185

Bingham

States that he does not know of any others studies
performed.

190

Vice-Chair Starr

Wonders about the role of Enron’s role in the assets
they currently own. Asks how involved
Enron is in running PGE’s own operations.

200

Bingham

Replies that major decisions by PGE are ratified by
Enron’s board. Offers his
recollection that Enron has not overturned any of PGE’s decisions.

215

Vice-Chair Starr

Clarifies that PGE is essentially operating
independently.

220

Bingham

Affirms that is correct.

225

Sen. Monnes Anderson

Asks if PGE could issue common stock to its holders.

230

Bingham

Replies that PGE will issue stock directly in
accordance with the claims made.

233

Sen. Monnes Anderson

Wonders what would happen if PGE issued the stock.

235

Bingham

Replies claimants would get shares and could then
sell them.

240

Chair Metsger

Thanks them for their testimony. Asks about employees of PGE that lost
their retirement plans with Enron.
Wonders where on the scale of credits would they stand.

250

Bingham

Replies he hopes the claims are lower than proposed.

255

Chair Metsger

Wants to clarify the ability of PGE employees to be
claimants.

260

Bingham

Responds he doesn’t know what the total would be.

265

Chair Metsger

Suspects that their possibility of receiving a
significant amount is low.

270

Bingham

Replies that it depends on the definition of significant. Provides an estimate for a potential
claim. Clarifies that they will get
back the current value of their common stock, which is not expected to be
very much.

275

Chair Metsger

Thanks them for their time. States they will hear the rest of the
testimony at the next meeting. Outlines intentions for next meeting.

285

Bingham

Interjects that there was a complaint filed called
the Tittle Action which relates to common stock and retirement claims. Points out they are close to a settlement
in that case.